Jan. 3, 2022
Questions regarding the proposed amendments to Paragraph (f)(3)(iv):
In Release No. 34-93614; File No. S7-19-21, "Proposed Amendments to Electronic Recordkeeping Requirements", on Page 34, top paragraph, referencing Paragraph (f)(3)(iv) of the current version of Rule 17a-4 which requires "a broker-dealer to organize and index accurately all information maintained on both original and any duplicate storage media", the Commission, is, "proposing to amend the paragraphs of Rules 17a-4(f) and 18a-6(e) to impose obligations on broker-dealers and SBS Entities to organize and maintain information necessary to locate records stored on their electronic recordkeeping systems without mandating the use of indexes" since 1) "some electronic recordkeeping systems may use means other than indexes to organize and locate records stored on the systems" and 2) "the references to indexes in Rule 17a-4(f), in part, reflect the widespread use of optical disks to store records electronically when the rule was adopted in 1997."
Question: When broker-dealers and SBS Entities choose to use indexes (text indexes) to catalog and retrieve information from their electronic recordkeeping systems, as done in electronic communication archives, does the proposed amendment to Paragraph (f)(3)(iv) remove the requirement to "organize and index all information" as required in the original version of Rule 17a-4?
Further, the archiving vendor interpretation of "organize and index all information" traditionally meant that all documents and included text that can be reasonably cataloged and indexed must be done so. Questions still remain, however, as to how to treat data that cannot be reasonably indexed and cataloged. For example, spreadsheets may contain millions of data points that are not necessarily useful for searching purposes, but because of the "index all information" interpretation, firms are incurring large storage costs to index all data so they can meet the perceived indexing requirement. Additionally, some documents or files are not able to be indexed at all due to encryption of data which makes information unreadable and therefore unable to be indexed and searched. To solve for these and other storage and retrieval challenges, vendors make available enhanced search capabilities that will also return data that is not able to be reasonably indexed / cataloged when a search is executed. Though this practice may result in over-production of data, it is seen as a way to satisfy the "index all information" interpretation while also balancing the cost / benefit of indexing all information.
Question: Would the practice of providing enhanced search capabilities designed to retrieve unindexed or not fully indexed data align with the proposed amended requirement to "organize and maintain information necessary to locate records stored on their electronic recordkeeping systems"?
Kind Regards,
Brayden John | Enterprise Data Intelligence | Insightful Technology, NYC